A sizable minority of America’s youth aren’t in school or attached to the labor force. And it’s costing taxpayers big.

About 17 percent of America’s young people are “opportunity youth” — or people ages 16-24 who aren’t attached to the labor force — according to a report prepared by researchers for the Corporation for National and Community Service and the White House Council for Community Solutions (h/t Think Progress). Each one of these 6.7 million young people is costing taxpayers $13,900 per year and it doesn’t stop there. After 25 years old, they’ll cost taxpayers $170,740 over their lifetime, the report found.

That means that in total, those currently classified as so-called opportunity youth will cost taxpayers $1.56 trillion in present value terms over their whole lifetime.

“Both taxpayers and society lose out when the potential of these youth is not realized,” the report said.

There is clearly work that needs to be done, even if it’s simply keeping streets clean and roads repaired. It’s not as if these youth are unwilling or unable to perform tasks like that, either. A government run guaranteed employment program would allow us to provide a social safety net for anyone on hard times; this translates to less crime, less poverty, fewer evictions or major financial repercussions, better education for the populace and a more stable environment for any children.

It could look like the unemployment office now, except that instead of being handed leads for employment after you’re done with the paperwork and waiting on a bimonthly check, you pick from a series of jobs that need to be done by the government (infrastructure and community building, primarily) and are paid a living wage until you can find a better job.

It would definitely cost money, but maybe not as much as you might think. We already pay huge sums of money as a consequence of our unemployment rates. Increased crime rates means more money spent on police work, judicial processes and incarceration. Less access to healthcare (without a steady check, insurance is tough to maintain) means increased reliance on emergency care, a more expensive and less effective option.

We’ve already spent $434 Billion on unemployment benefits, $185 billion of which was paid by taxation. I’m not saying that it would pay for itself, but surely a tax increase is worth all the benefits.

McConnell is offering a philosophical response to a practical problem. It gets back to what we discussed last week — the right simply cannot fathom a pragmatic approach to governing. Democrats see a jobs crisis, want to save hundreds of thousands of jobs, craft a plan that works, and find a straightforward way to pay for it. Republicans see a jobs crisis and ask, “Are those public-sector jobs? What does our ideology tell us about aid to states? Unemployment, schlumemploymet — how does this affect the size of government?”

The GOP line doesn’t address the underlying problem because, as McConnell explained yesterday, Republicans don’t care about the underlying problem. What matters is the integrity of conservative ideology, not keeping teachers and cops on the job.

Notice, McConnell didn’t say the Democratic jobs bill would be ineffective. He knows — everyone knows — the measure would keep those Americans working, which would not only help the workers and their families, but also the local economies and those who benefit from their services. But for the Senate Minority Leader, whether the legislation would be effective or not is irrelevant.

Bringing down unemployment isn’t McConnell’s priority. Winning a philosophical argument is.

(Source: sarahlee310)

In a recent Wall Street Journal op-ed, Robert Barro dismisses Agriculture Secretary Tom Vilsack’s claim that every dollar spent on food stamps generates $1.84 of economic activity.  Barro claims Secretary Vilsack’s “Keynesian” estimate conflicts with “regular” economics, which he says predicts that increasing transfer payments like food stamps and unemployment insurance (UI) would lead to a decline in economic activity and a fall in employment because they would “motivate less work effort by reducing the reward from working.”

Contrary to Barro’s assertion, however, the Secretary is in good company appealing to Keynesian multiplier analysis under current economic conditions, and Barro’s assessment is implausible.  For example, the Congressional Budget Office has estimated that transfer payments to individuals like the increase in food stamp benefits and additional UI compensation of the 2009 Recovery Act generate between 80 cents and $2.10 for each dollar spent when the Federal Reserve holds short-term interest rates as low as possible (see Table 2 here).  Barro says “there is zero evidence” that deficit-financed transfers increase economic activity and boost employment;” CBO explains why, taken as a whole, the evidence says they do.

Circumstances matter.  When the economy is humming along on all cylinders and unemployment is very low – think the late 1990s – deficit-financed increases in food stamps and UI would not increase economic activity or boost employment.  The multiplier would be essentially zero because the Federal Reserve would raise interest rates in response.  Any rise in demand stimulated by the increase in transfers would be offset by the fall in demand due to higher interest rates.  Barro’s concern about work disincentives could come into play if transfers were exceedingly generous.

That’s not where we are now.  Higher interest rates due to Fed tightening will not likely be a concern anytime soon.  Instead, we face a long period of high unemployment and excess productive capacity.  These are just the circumstances in which transfers will most likely be effective in stimulating demand and creating jobs.

Food stamp and UI recipients spend most of any increase in income they get, and they spend it quickly.  That means more spending at local businesses and more orders for those businesses’ suppliers.  The additional spending generates income for local businesses and their suppliers, and the boost to demand multiplies through the economy.  With nine unemployed workers for every two job openings and businesses generally operating well below full capacity, constraints on expanding production and employment to meet the increased demand should be minimal.  Treasury borrowing costs will continue to be low and we will increase the odds that a real economic recovery will take hold.

I wish we were at a point where further deficit-financed spending would be counterproductive because growth is strong and full employment is in sight.  But, we’re clearly not there yet and it’s bad economic policy – regular or irregular – to pretend otherwise.

Trying to eliminate food stamps and unemployment to help the economy is not only cruel, it’s stupid. You’d get better results trying to squeeze water from a stone.

Okay so we’re coming up to the deadline of when the Treasury can’t find a way to pay everyone they need to, unless they borrow money (they can’t borrow more until the debt ceiling is raised). We’re calling this the US “defaulting”, but what does that actually entail? ProPublica has a great piece breaking down the answer:

But to be more specific, the United States actually has two main types of “debt”: 1) the debt to investors who bought U.S. bonds, meaning they loaned money to the U.S. government, and 2) bills that come due, such as payments owed to Social Security, Medicare, pension plans, contractors etc…

It’s still unclear exactly which obligations will get covered and which won’t, but the likelihood that bondholders will go unpaid is extremely low. Or nil, as Slate puts it. One anonymous administration official told Bloomberg that bondholders will be prioritized…

Assuming the United States does prioritize investors, Social Security recipients may not be the only ones who could be left empty-handed until the mess is sorted out. Government contractors could be in this group, and they’re bracing for it. The troops could have their paychecks put on hold. Veterans payments could be stopped. Revenue going from the federal government to the states for construction, Medicaid and unemployment would also likely be stopped. 

So the construction of roads (which rebuilds our crumbling infrastructure and provides jobs for people who would otherwise be without), the unemployment checks for people out of work, and people who can’t pay for medical treatment are the ones being penalized for us not borrowing money to pay our debts. 

Two million people are going to be pennyless this Christmas after the Senate failed to extend unemployment benefits-

Extended unemployment benefits for nearly 2 million Americans begin to run out Wednesday, cutting off a steady stream of income and guaranteeing a dismal holiday season for people already struggling with bills they cannot pay.

Unless Congress changes its mind, benefits that had been extended up to 99 weeks will end this month.

Hours before beefed-up benefits were set to expire at midnight on Tuesday, Democrats sought to extend them for another year. But they were blocked by Republican Senator Scott Brown, who said Democrats should have taken time to work out a compromise.

“It’s not the way to do business in the United States Senate, and if it is it needs to change,” Brown said.

With the unemployment rate stuck at around 9.6 percent, the two parties have been sharply divided over how to cover the cost of weekly checks that help jobless people stay afloat.

This is the first time Congress has failed to extend unemployment benefits with the unemployment rate this high.  The most sickening thing about it is that since it’ll hurt the economy, the GOP has succeeded in hurting Obama even though they were the ones to block the extension.  

The state of the economy directly correlates with whether or not an incumbent president is re-elected (with the exception of Ronald Reagan in 1984 and FDR in 1936, no president has ever been reelected with unemployment above 6%).  Our media is too spineless to acknowledge that this is the direct result of GOP action (every dollar spent on unemployment benefits puts two dollars back into our economy), and place the blame firmly where it belongs: at the feet of the Republican party.